If anything, Ackman, should be investigated, Herbalife says. Here’s the statement from the company:

“We regret that the National Consumers League has permitted itself to be the mechanism by which Pershing Square continues its attack on Herbalife. If anything, it is Pershing Square that should be investigated by appropriate authorities. Its actions are motivated by a reckless $1 billion bet against the company based on knowingly false statements about Herbalife. Those statements unquestionably cause harm to our consumers and investors and indeed all consumers and investors.

“Herbalife is committed to providing consumers with high quality products that address a real need: weight management and nutrition. Our consumer-protection rules not only meet, but in many cases exceed the standards prescribed by the Direct Selling Association (DSA). Herbalife is a long-time member in good standing of the DSA, which has 182 member companies, including Avon, Amway, Nu Skin, Primerica and The Pampered Chef (a Berkshire Hathaway company).

“Herbalife is a financially strong and successful company, having created meaningful value for shareholders, significant opportunities for distributors and positively impacted the lives and health of its consumers over the company’s 33-year history.”

Herbalife shares fell 1.1% to $39.95 in premarket trading. The stock is down more than 40% from a year ago.

Meanwhile, the Direct Selling Association also released a statement backing Herbalife in response to the National Consumers League’s letter. The industry trade group has previously defended Herbalife.

Here are the emailed comments from DSA President Joseph Mariano:

“DSA has a long history of cooperation and partnership with the NCL on matters of consumer protection and we share the mutual goal of ensuring consumers are treated fairly and honestly. While we are concerned about the potential for NCL’s request to be misconstrued and further allow short sellers to capitalize on negativity in the marketplace, if a balanced examination of the facts is conducted by any truly disinterested party it will result in only one conclusion – that direct selling companies like Herbalife are committed to protecting consumers and creating a better life for their communities, their salesforce members and their customers.

“I respect NCL and hope that this letter to the FTC will not be used by short sellers to distort the truth about the value of direct selling to millions of Americans. Based on the track record of misstatements of facts and the law by these same short sellers, my concern is for the harm that could be caused to hard working direct sellers as well as consumers who could be negatively impacted by these actions.

“After months of unsubstantiated allegations and distortions regarding the law and practices associated with direct selling, the only parties actually making claims of wrongdoing are financial moguls who manage billions of dollars in assets and stand to gain millions more when the company’s stock declines. Sadly, the livelihoods of millions of hard-working Americans are being threatened by the greed of certain short sellers.

“Herbalife is a longstanding member of the Direct Selling Association and is subject to the provisions of a strict code of ethics designed to ensure direct sellers practice only the highest standards of business ethics. “By virtue of their DSA memberships, Herbalife and the other 181 DSA member companies have consistently committed themselves to meeting or exceeding not only the requirements of the law, but also the rigorous DSA Code of Ethics.

“I believe consumers stand to gain much more if instead appropriate authorities were to investigate the activities of short sellers who engage in blatant market manipulation at the expense of honest consumers.”

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Comments (5 of 11)

If someone pays people to take actions that are designed to drive down the price of a stock so they can make a profit, is that market manipulation?

9:26 pm March 13, 2013

Short seller Analyst went hiding ? wrote :

he was proven wrong using their own data and ever since he is hiding.

9:20 pm March 13, 2013

WE STILL HAVE A JOB TO CLEANUP WALLST wrote :

Hedge funds wants to destroy companies for profit but do not want to pay taxes. They want to use Govt resources, and even they said they have the money to buy the Congress to change the laws.

7:20 pm March 13, 2013

Kevin wrote :

The truth will come out eventually! Bill Ackman may be looking for a new career! Sadly he does not meet the criteria of working within the direct sell industry. The colleagues I have worked with over the last 18 years are good decent, honest people, trying to make a difference in the lives of others. Bill, you dont qualify!

10:43 am March 13, 2013

Douglas M. Brooks wrote :

Herbalife and the Direct Selling Association have a right to be ticked off at the National Consumer League for calling for an investigation of Herbalife. The DSA, through its Direct Selling Educational Foundation, provided funding to the NCL in 2009 to conduct a consumer survey concerning pyramid schemes. Too bad the NCL refused to stay bought.

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